Perfect 10, is a company that markets and sells copyrighted images of nude models, with a subscription service on the Internet. Some websites republish these copyrighted images on their own web pages without authorization. Google's search engine searches and automatically indexes the errant web pages. Perfect 10 tried to stop Google from facilitating access to the infringing images. At the District Court level Google was preliminarily enjoined from creating and displaying thumbnail versions of the images. The court did not enjoin Google from linking to third party infringing websites.

On appeal to the 9th Circuit, Google raised both a fair use defense, and an ISP DMCA defense under Title II of the DMCA. Perfect 10 argued that Google's search engine was directly infringing two exclusive rights, display and distribution rights. The 9th Circuit basically agreed with the District Court's findings, with clarification on some of the issues, as follows:

The 9th Circuit dismissed Perfect 10's argument that the in-line linking and framing by Google to the infringing full size images was a violation of copyright law. The court stated:

While in-line linking and framing may cause some computer users to believe they are viewing a single Google webpage, the Copyright Act, unlike the Trademark Act, does not protect a copyright holder against acts that cause consumer confusion. Cf. 15 U.S.C. § 1114(1) (providing that a person who uses a trademark in a manner likely to cause confusion shall be liable in a civil action to the trademark registrant).

The court also held, in accord with the District Court, that the distribution right was not violated because there was no actual dissemination of the full size images to the user's computer.

On the question of the thumbnail images, the court rejected at the outset Perfect 10's argument that providing access to infringing websites cannot be deemed transformative and is inherently not fair use. The court held that this was in fact a transformative use, and thus weighing in favor of the fair use defense, even though Google incorporated the thumbnail images into the search engine results. The court noted:

In conducting our case-specific analysis of fair use in light of the purposes of copyright, Campbell, 510 U.S. at 581, we must weigh Google's superseding and commercial uses of
thumbnail images against Google's significant transformative use, as well as the extent to which Google's search engine promotes the purposes of copyright and serves the interests of
the public. Although the district court acknowledged the "truism that search engines such as Google Image Search provide great value to the public," Perfect 10, 416 F. Supp. 2d at 848-
49, the district court did not expressly consider whether this value outweighed the significance of Google's superseding use or the commercial nature of Google's use. Id. at 849. The
Supreme Court, however, has directed us to be mindful of the extent to which a use promotes the purposes of copyright and serves the interests of the public. See Campbell, 510 U.S. at
579; Harper & Row, 471 U.S. at 556-57; Sony, 464 U.S. at 431-32.

The court concluded that the transformative nature of the search engine, in light of the public benefit, outweighed any minor commercial use (Google's links to AdSense partners). The court also noted that the district court did not find persuasive Perfect 10's argument that Google's thumbnail images had an adverse effect on Perfect 10's attempt to market the small images for downloads to mobile phones. Thus the finding on factor 1 of the fair use test was as follows:

Instead, we conclude that the transformative nature of Google's use is more significant than any incidental superseding use or the minor commercial aspects of Google's 5782 PERFECT 10 v. AMAZON.COM search engine and website. Therefore, the district court erred in determining this factor weighed in favor of Perfect 10.

On factor two of the fair use test, nature of the Copyrighted Work, the court found that since the photos were on the Internet when Google indexed them, the fact that the images were creative only weighed slightly in favor of Perfect 10, stating:

Once Perfect 10 has exploited this commercially valuable right of first publication by putting
its images on the Internet for paid subscribers, Perfect 10 is no longer entitled to the enhanced protection available for an unpublished work. Accordingly the district court did not err in holding that this factor weighed only slightly in favor of Perfect 10.9

On the third factor of the fair use test, the court found the fact that the whole image was copied was reasonable for a search engine, and thus this factor did not weigh in favor of either party.

On the fourth factor, effect of use on the market, although the District Court found that Google's use of the images had the potential to harm the market for cell phone downloads, since there was no finding of such actual harm, the Court of Appeals found the fourth factor did not favor either party. On balance, the Court of Appeals concluded that the fair use defense would not likely be overcome by Perfect 10.

On the question of direct infringement, the Court of Appeals remanded the case to the District Court to consider whether Google would be contributorily liable under the test announced by the Court of Appeals. That test is as follows:

Accordingly, we hold that a computer system operator can be held contributorily liable if it
"has actual knowledge that specific infringing material is available using its system," Napster, 239 F.3d at 1022, and can "take simple measures to prevent further damage" to copyrighted works, Netcom, 907 F. Supp. at 1375, yet continues to provide access to infringing works.

On the issue of vicarious liability, the CA held that Perfect 10 had not shown that Google had the legal right to stop or limit the direct infringement of third party websites. The CA held also that the District Court should decided if Perfect 10 was likely to succeed in showing that Google was not entitled to limitations on injunctive relief provided to ISPs under the DMCA.

This case under the DMCA asks whether copyright owners and their representatives may serve subpoenas on internet service providers ISPs to obtain personal information about the ISP's subscribers. The RIAA issued subpoenas under 17 USC 512(h) to Charter Communications, an ISP, seeking the identity of persons the RIAA believed to be engaging in copyright infringement. The subscribers were using the new generation of P2P file sharing programs which allow users to access files located on other computers throughout the internet. Charter's role was confined to acting as a conduit in the transfer of files. Charter fought the subpoenas under the DMCA, but was ultimately ordered by the lower court to turn over the names and addresses of its subscribers. In the appeal to the 8th Circuit, Charter argues that the lower court erred in enforcing the subpoena because 1) 512(h) only applies to ISPs engaged in storing copyrighted material and not those acting solely as a conduit; 2) a judicial subpoena must be supported by a case or controversy at the time of its issuance, and no such case or controversy existed; 3) the enforcement of the subpoena violates the privacy protections for cable subscribers set forth in 47 USC 551(c)(1); and 4) section 512(h) violates the first amendment rights of internet users. The Court sided with Charter, and also with the US Court of Appeals for the DC Circuit in the Verizon decision and held that because Charter's function was limited to acting as a conduit, 512(h) does not authorize the issuance of a subpoena, because the ISP cannot remove or disable one user's access to infringing material resident on another's computer. (See 17 USC 512(c)(3)(A)(iii))

The court also noted in passing that the 512(h) subpoena provision may unconstitutionally invade the power of the judiciary by creating a statutory framework pursuant to which Congree, via statute, compels a clerk of court to issue a subpoena.

In this case a federal judge in Pennsylvania held that ISPs must notify defendants of the subpoena that has been issued and allow the defendants 21 days from the issuance of the subpoena to challenge the release of their information to the record companies. The ISPs (colleges and others) must give the John Doe defendants details before disclosing their identity. In addition, the notice to the defendants must tell them how to file a motion to quash a subpoena, and offer them lists of defense lawyers.

In this case two students from Swathmore (Nelson Chu Pavlosky and Luke Thomas Smith) and the Online Policy Group successfully took on Diebold Inc., and Diebold Election Systems (Diebold). The students had used Internet access provided by Swarthmore to criticize the reliability of Diebold's voting machines, and to link to an email archive that contained internal emails between Diebold employees acknowledging problems with the machines. The email archive had been posted by unknown persons.

Diebold sent cease and desist letters to the ISPs pursuant to the safe harbor provisions (17 USC 512)of the DMCA, asking the ISPs, including Swarthmore, to disable access to what Diebold claimed was copyright infringing material. The students and the Online Policy Group sought injunctive, declatory and monetary relief, claiming that Diebold's claim of copyright infringement was material misrepresentation under 17 USC 512(f). Diebold was never able to identify material that contained copyrighted content, and was forced to acknowledge that at least some of the emails linked to were covered under the fair use doctrine. The Court found use of the archive transformative in that it supported criticism in the public interest, e.g. promoting a discussion about the problems associated with Diebold's voting machines. The Court concluded as a matter of law that Diebold knowingly materially misrepresented that Plaintiffs infringed Diebold's copyright interest, at least with respect to the portions of the email archive clearly subject to the fair use exception. The court stated:

" No reasonable copyright holder could have believed that the portions of the email archive discussing possible technical problems with Diebold's voting machines were protected by copyright,and there is no genuine issue of fact that Diebold knew--and indeed that is specifically intended--that its letters to OPG and Swarthmore would result in prevention of publication of that content. The misrepresentations were material in that they resulted in removal of content from websites and the initiation of the present lawsuit. The fact that Diebold never actually brought suit against any alleged infringer suggests strongly that Diebold sought to use the DMCA's safe harbor provisions--which were designed to protect ISPs, not copyright holders--as a sword to suppress publication of embarrassing content rather than as a shield to protect its intellectual property."

The judge ordered Diebold to pay $5,200 to plaintiffs in damages and to reimburse them for their legal fees.

321 Studios v. MGM (United States District Court for Northern District of California) Feb. 19, 2004 opinion granting Defendant MGM's motion for partial summary judgment. The Plaintiff in this case, 321 Studios, LLC, was a company that marketed and sold software for copying DVDs. The software allowed users to copy a DVD movie to a hard drive or another blank DVD. DVD stands for digital versatile disc, a five inch wide plastice disk that stores digital information, and that is often used for the distribution of movies. The DVDs often store the content is a format called Contents Scramble System, or CSS, so that digital copies cannot be made of the movies.

The products sold by 321 contained a CSS player key that allowed access to the data on encrypted DVDs. The Plaintiff filed a complaint for declatory relief seeking a judgment that distribution of these products (DVD Copy Plus and DVD-X-Copy) did not violate the anticircumvention provisions of the DMCA. (see 17 USC 1201(a)(2) and 17 USC 1201(b)(1)). Plaintiff argued making back up copies of DVDs for one's own personal use is fair use under copyright law, and that this was the primary intended use of its products. The Court disagreed, and held that the software in question was in violation of both 1201(a) (2) and 1201(b)(1) of the DMCA, because it was designed primarily to circumvent CSS, and marketed to the public for circumventing CSS. The Court reached this decision applying the intermediate level of scrutiny to the governmental regulation, citing the case of United States v. Elcom LTD, 203 F. Supp. 2d 1111 (N. D. Cal. 2002) In that case the court noted that it is not necessary that the government select the least restrictive means of achieving a legitimate governmental interest. The Plaintiff was enjoined from selling its products, but has appealed the ruling. See 321 Software appeals ruling to stop production.

This case involves the subpoena power under section 17 U.S.C.§ 512(h), which is in the section of the Digital Millenium Copyright Act which limits liability for Internet Service Providers for certain online infringement . The RIAA had subpoenaed Verizon to turn over names of Verizon Internet Services' subscribers who appeared to be trading large numbers of .mp3 copyrighted music files via P2P file sharing programs. The Court agreed with Verizon's interpretation of the statutory language, holding that both the terms of 512(h) and the overall structure of section 512 lead to the conclusion that a subpoena under this particular section of the statute (512(c)(3)(A)(iii)) may only be issued to an ISP engaged in storing infringing material on its servers, and does not allow a subpoena to issue where the ISP, as in this case, is merely acting as a conduit for data transferred between two internet users. The Court noted that P2P software was "not even a glimmer in anyone's eye when the DMCA was enacted" and that Congress is best equipped to deal with this issue.

In this high profile case under the DMCA the 2nd Circuit Court of Appeals was asked to overturn an injunction by a lower court that prevents an online magazine 2600 (www.2600.com) from publishing or linking to code that can be used to decrypt a CSS (Content Scrambling System) protected DVD. Corley, the publisher of the above web site, had published a story about a Norwegian teenager who had broken the DVD code, and created DeCSS, a software program that allows a DVD content protected movie to be copied. The teenager had legally purchased a DVD in another country, and found he had to break the code to watch the movie on his home computer, which was not compatible with the foreign format. A number of motion picture studios then sued Corley for publishing the code, claiming it violated the DMCA. The publisher and the Electronic Frontier Foundation (EFF) claimed the injunction should be lifted, and that failure to do so violates the Free Speech clause of the First Amendment. The publisher argued that the dissemination of DeCSS by a member of the media covering an issue of public concern if free speech. The American Library Association supported the publisher in this case.

The Court affirmed the lower court injunction and refused to adopt the argument of the defendants that there upholding the injunction would violate the First Amendment. Relevant excerpts from the case follow:

When the Framers of the First Amendment prohibited Congress from making any law "abridging the freedom of speech," they were not thinking about computers, computer programs, or the Internet. But neither were they thinking about radio, television, or movies. Just as the inventions at the beginning and middle of the 20th century presented new First Amendment issues, so does the cyber revolution at the end of that century. This appeal raises significant First Amendment issues concerning one aspect of computer technology--encryption to protect materials in digital form from unauthorized access. The appeal challenges the constitutionality of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 1201 et seq. (Supp. V 1999) and the validity of an injunction entered to enforce the DMCA.

An item of some controversy, both in this litigation and elsewhere, is the extent to which CSS-encrypted DVDs can be copied even without DeCSS. The record leaves largely unclear how CSS protects against the copying of a DVD, as contrasted with the playing of a DVD on an unlicensed player. The Defendants' experts insisted that there is nothing about the way CSS operates that prevents the copying of a DVD. Declaration of Frank Stevenson P 23 ("Bit-for-bit copying, which precisely duplicates the content of one DVD to another, results in a fully-playable product."); Trial Tr. at 751 (Testimony of Professor Edward Felten) (CSS "could [not] have prevented the encrypted content from being copied to somewhere else"); Deposition of Barbara Simons at 48-49, 77. Some of the Plaintiffs' experts countered simply that "copying to a hard drive is something that compliant DVD players are not allowed to do," without explaining why. Trial Tr. at 37 (Testimony of Dr. Michael I. Shamos); see also Deposition of John J. Hoy at 347-48; Deposition of Fritz Attaway at 83. Another expert indicated that while a DVD movie can be copied to a computer's hard drive in encrypted form, the movie cannot be played without a DVD actually present in the DVD drive. Deposition of Robert W. Schumann at 153; Second Supplemental Declaration of Robert W. Schumann P 15. This expert did not identify the mechanism that prevents someone from copying encrypted DVDs to a hard drive in the absence of a DVD in the disk drive.

However, none of this detracts from these undisputed findings: some feature of either CSS itself, or another (unidentified) safeguard implemented by DVD manufacturers pursuant to their obligations under the CSS licensing scheme, makes it difficult to copy a CSS-encrypted DVD to a hard drive and then compress that DVD to the point where transmission over the Internet is practical. See Universal I, 111 F. Supp. 2d at 338. Conversely, a DVD movie file without CSS encryption is easily copied, manipulated, and transferred. See id. at 313. In other words, it might very well be that copying is not blocked by CSS itself, but by some other protection implemented by the DVD player manufacturers. Nonetheless, in decrypting CSS, the DeCSS program (perhaps incidentally) sidesteps whatever it is that blocks copying of the files.

While there may be alternative means of extracting a non-encrypted, copyable movie from a DVD--for example, by copying the movie along with its encryption "bit-by-bit," or "ripping" a DVD by siphoning movie file data after CSS has already been decrypted by a licensed player--DeCSS is the superior means of acquiring easily copyable movies, see id. at 342, and in fact, is recommended by a DVD compression web site as the preferred tool for obtaining a decrypted DVD suitable for compression and transmission over the Internet, see id. We acknowledge the complexity and the rapidly changing nature of the technology involved in this case, but it is clear that the Defendants have presented no evidence to refute any of these carefully considered findings by the District Court.

Having concluded that computer code conveying information is "speech" [*450] within the meaning of the First Amendment, we next consider, to a limited extent, the scope of the protection that code enjoys. As the District Court recognized, Universal I, 111 F. Supp. 2d at 327, the scope of protection for speech generally depends on whether the restriction is imposed because of the content of the speech. Content-based restrictions are permissible only if they serve compelling state interests and do so by the least restrictive means available. See Sable Communications of California, Inc. v. FCC, 492 U.S. 115, 126, 106 L. Ed. 2d 93, 109 S. Ct. 2829 (1989). A content-neutral restriction is permissible if it serves a substantial governmental interest, the interest is unrelated to the suppression of free expression, and the regulation is narrowly tailored, which "in this context requires . . . that the means chosen do not 'burden substantially more speech than is necessary to further the government's legitimate interests.'" Turner Broadcasting System, Inc. v. FCC, 512 U.S. 622, 662, 129 L. Ed. 2d 497, 114 S. Ct. 2445 (1994) [**50] (quoting Ward v. Rock Against Racism, 491 U.S. 781, 799, 105 L. Ed. 2d 661, 109 S. Ct. 2746 (1989)). n26

The District Court's injunction applies the DMCA to the Defendants by imposing two types of prohibition, both grounded on the anti-trafficking provisions of the DMCA. The first prohibits posting DeCSS or any other technology for circumventing CSS on any Internet web site. Universal II, 111 F. Supp. 2d at 346-47, P 1 (a), [**61] (b). The second prohibits knowingly linking any Internet web site to any other web site containing DeCSS. Id. at 347, P 1 (c). The validity of the posting and linking prohibitions must be considered separately.

Posting DeCSS on the Appellants' web site makes it instantly available at the click of a mouse to any person in the world with access to the Internet, and such person can then instantly transmit DeCSS to anyone else with Internet access. Although the prohibition on posting prevents the Appellants from conveying to others the speech component of DeCSS, the Appellants [**64] have not suggested, much less shown, any technique for barring them from making this instantaneous worldwide distribution of a decryption code that makes a lesser restriction on the code's speech component. n29 It is true that the [*455] Government has alternative means of prohibiting unauthorized access to copyrighted materials. For example, it can create criminal and civil liability for those who gain unauthorized access, and thus it can be argued that the restriction on posting DeCSS is not absolutely necessary to preventing unauthorized access to copyrighted materials. But a content-neutral regulation need not employ the least restrictive means of accomplishing the governmental objective. Id. It need only avoid burdening "substantially more speech than is necessary to further the government's legitimate interests." Id. (internal quotation marks and citation omitted). The prohibition on the Defendants' posting of DeCSS satisfies that standard. n30

Mindful of the cautious approach to First Amendment claims involving computer technology expressed in Name.Space, 202 F.3d at 584 n.11, we see no need on this appeal to determine whether a test as rigorous as Judge Kaplan's is required to respond to First Amendment objections to the linking provision of the injunction that he issued. It suffices to reject the Appellants' contention that an intent to cause harm is required and that linking can be enjoined only under circumstances applicable to a print medium. As they have throughout their arguments, the Appellants ignore the reality of the functional capacity of decryption computer code and hyperlinks to facilitate instantaneous unauthorized access to copyrighted materials by anyone anywhere in the world. Under the circumstances amply shown by the record, the injunction's linking prohibition validly regulates the Appellants' opportunity instantly to enable anyone anywhere to gain unauthorized access to copyrighted movies on DVDs. n33

n33 We acknowledge that the prohibition on linking restricts more than Corley's ability to facilitate instant access to DeCSS on linked web sites; it also restricts his ability to facilitate access to whatever protected speech is available on those sites. However, those who maintain the linked sites can instantly make their protected material available for linking by Corley by the simple expedient of deleting DeCSS from their web sites.